Market data on the UK’s organic industry released this year paints a picture of a sector in rude health. The Soil Association’s influential annual market report revealed 2016 was the industry’s fifth consecutive year of strong growth, hitting 7.1%. This is especially impressive given non-organic grocery sales actually declined in the same year.
But delve a little deeper and a very different story of the same industry begins to emerge. At just 1.5%, the market share of organic produce in the UK, although rising, remains stubbornly low — especially when compared to other countries, including Denmark (9%), Germany (5%) and the USA (5%).
Organic boomtown UK?
Patrick Holden, founding director and CEO of the Sustainable Food Trust and winner of the Outstanding Achievement award at this year’s BBC Food & Farming Awards, says: “There’s been a tendency in the industry to talk the UK market up even when its been going down. The truth of the matter is that 2007/8 was the peak of the market when recorded sales were in the region of £2.1bn.”
In the years following the 2008 banking crisis, sales of organic produce in the UK plummeted, reaching a low of just £1.74bn in 2012 (a fall of 36%).
“While sales last year crossed the £2bn mark again, the reality is that this is simply the market returning to the level it was at before,” says Holden, who has been an organic farmer since 1973 as well as a former CEO of the Soil Association. “We need to be honest about this and ask why it declined so much in the first place.”
According to Simon Crichton, Triodos Bank’s specialist in organic food, farming and trade, organic farm production followed the same downward trajectory. “From a peak of 730k hectares of organic farmland in the UK in 2008/9 it has fallen to around 500k hectares. For whatever reason, it is clear many farmers decided to pull out as a reaction to declining sales following the financial crisis and lack of support from government.”
The widespread view in the media and among industry analysts was the organic sector was simply suffering because consumers’ wallets were being squeezed by the recession. But for Holden, Crichton and, indeed, all the others interviewed for this article, this only tells part of the story.
First is the fact the UK was an anomaly in seeing organic sales fall so dramatically. Despite the world being engulfed by the same economic mess, no other country saw their organic industry hit in the same way – elsewhere sales mostly flat-lined or managed to sustain modest growth.
So, what else was at play? Clare McDermott, business development director at the Soil Association, believes the domination of supermarkets in the grocery market was a big factor. During the financial crash, supermarkets focussed on cutting prices and organic ranges were among the first to go.
She says: “The UK is really quite unique when you consider just how much the retail sector is dominated by a few multiple retailers. It was even more so back then when the large multiples enjoyed around 80% of the entire grocery market, which isn’t the case today.”
“If you’re looking at why the UK was the only country worldwide to experience such a big step back in 2008/9, it was a lot to do with the fact these retailers simply took organic products off their shelves.”
And Holden recalls: “When the banking crisis hit, the supermarkets anticipated down-trading among their customers and so effectively stopped stocking organic produce, which of course created a self-fulfilling prophecy because customers just couldn’t buy it.”
A polarised food industry
Not only did supermarkets cut off the most important route to UK consumers, Crichton argues, they simultaneously increased the cost of the organic produce they continued to stock. “Because of the low volumes of organic produce the supermarkets actually put on higher margins increasing the cost difference with non-organic equivalents,” he says.
This polarisation between organic and non-organic was exacerbated by supermarkets’ turf war – buoyed on by the arrival of discount supermarkets — to slash prices. It created what Daniel Crossley, executive director of the Food Ethics Council (FEC), describes as a “race to the bottom”.
“If we’re challenged by cheaper and cheaper prices, the premium for organic will be higher. But the price we pay at the checkout is not the true cost of food,” he says. “We’re just paying for it in ways that aren’t immediately visible.”
And it’s not just price that was polarised. Holden says the same thing happened to the farming industry itself. “Another barrier to a shift towards more sustainable food systems is that the food market has been polarised between organic and non-organic with producers of the former cast as ‘good’ and producers of the latter cast as ‘bad’. We need to challenge the markets to unite farmers not divide them. We need to make sustainability inspiring.”
The true cost of food
The Sustainable Food Trust is helping to unpick the hidden costs of food through a programme called “True Cost Accounting”. “The price we pay for our food doesn’t reflect the true cost,” Holden explains. “There are many hidden costs in the form of bills to the NHS, bills to clean up nitrogen from the soil or remove pesticides from our water supplies.
“When we buy organic, we pay the true cost and so it’s honest. But the low market share means more than 95% of food comes with these hidden costs that are slowly eroding the social and natural capital of UK Plc’s balance sheet. If we move towards true cost accounting, we’d realise organic food is not expensive at all.”
Refining the message
It is perhaps too easy to blame the slump entirely on the supermarkets’ race to the bottom. What about the organic food sector itself? Catherine Fookes, previously campaign director at the Organic Trade Board, which was set up in 2009 as a direct response to falling sales, says “a kind of complacency” had taken hold of the organic sector in the UK.
“In the boom years before the crash anything with a label saying ‘organic’ would fly off the shelves,” she says. “It’s fair to say this meant the sector didn’t actually need to work hard to communicate the benefits of organic produce and as a result it didn’t invest in educating the public.”
“The media played a big part in this,” says Holden. “Up until 2008 we’d enjoyed a honeymoon period with the media, but when the recession struck the media started to portray the organic sector as elitist – only for the posh and rich.”
Challenging political apathy
With Brexit on the horizon, there is an emerging consensus the government must do more if the UK’s food and farming industry is to capitalise on consumers’ wish to buy more organic food – both in the UK and worldwide.
“The situation today is that we have a strong growth market and yet organic farming is at a relative low point so can’t meet this demand,” explains Crichton. “The conclusion has to be that we’re importing more organic food and UK farmers are not enjoying this surge in demand.”
Crossley says the government faces a simple choice. “It either supports a race to the bottom or a race to the top,” he says. “While it would be a fools game to predict what the UK government will do in terms of Brexit, the risk is they will jump into any old trade deal as quickly as possible and at any cost.”
If the government’s dismissive response to the threat of chlorine-washed poultry in exchange for a quick trade deal with the USA is anything to go by, Crossley’s worst fears may yet be confirmed.
But Brexit, many in the organic industry point out, also offers an opportunity to set UK food and farming on a new path. Crichton says: “Whatever your views on Brexit, there might be something of a silver lining when it comes to agriculture in the UK.
“If we come out of CAP , the British government would have no choice but to take ownership of agriculture and suddenly politicians would be directly accountable. Because the UK taxpayer would be paying directly for this, I wonder if policy in this area would improve.”
A resurgent sector
The Organic Trade Board, Organic Farmers & Growers, the Food Ethics Council, the Soil Association and the Sustainable Food Network are all united in their calls for the UK government to support the food and farming industry to capitalise on both domestic and global demand.
They point out the UK lags well behind many other countries, where policies on public procurement, grants to encourage conversion to organic farming and policy frameworks driven by central governments are all putting organic and sustainable production centre stage.
Crichton says: “You could argue there would be very little point in trying to compete internationally in the conventional food market. This market is already saturated with products at a cheaper cost than the equivalent in the UK. Food really can’t get any cheaper, so it’s hard to see how this could help the government achieve its ambition to increase exports while meeting our own growing sustainable needs.”
And, anyway he asks, why couldn’t the UK lead in a race to the top?
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